ECB fears of not getting their money back has clouded their judgement and raised real contagion risks

Green Party leader Eamon Ryan said today.  "The elaborate reshuffling of cash and debt obligations that was announced yesterday will do little or nothing to improve Ireland's overall debt sustainability.  What it does do is raise real concerns about the ability of the European Central Bank (ECB) to get us out of this crisis.   The ECB has shown some flexibiity in the provision of Emergency liquidity and medium term credit to the European banking system.  However, it seems particularly sensitive to concerns raised in Germany about the volume and quality of the assets it now holds on its balance sheet.  Because of this they seem determined not to give an inch when it comes to any adjustment to the repayment terms for the Irish Government's Promissory note."

"The irony is that the intransigent position of the ECB could now reignite contagion risks, the avoidance of which was the cornerstone of their whole strategy.   The ECB should act like any ordinary bank, facing a creditor who has a viable business model but who simply cant pay off all its debts to the original schedule.  It makes sense to sit down and work out a sensible repayment plan rather than shutting the organisation down.    What happened yesterday was akin to us going to another bank to get a short term overdraft facility, just to allow payment of the next mortgage installment.  The ECB has to realise that failure to restructure some of our debts carries the risk of the whole loan book going down."

"Minister Noonan understandably wanted to dress up the changes as a positive signal that the rest of Europe is showing some flexibility. However, the lack of any real change after months of hard negotiation leave me with a cold, fearful feeling that yesterday was actually a bad news day." concluded Eamon Ryan